I may not have gotten as many pips as I wanted with my earlier long EUR/CAD trade, but that doesn’t mean I’m ditching my bullish bias on this pair.
In hindsight, I probably should’ve been more patient in waiting for this neater tech play.
Long EUR/CAD Idea
I’m seeing this classic break-and-retest scenario on the pair’s 4-hour time frame as price is currently testing the broken resistance area around the 1.4250 minor psychological mark.
This is close to the 38.2% Fibonacci retracement level and might keep holding as support moving forward.
Stochastic is also indicating oversold conditions and is turning higher, suggesting that euro bulls could get back in the game.
Besides, the pair has been falling almost nonstop for the past few days so I can’t help but think that it’s already gone past its full weekly range, which means that it could be ready to turn.
However, European market seem to be feeling Brexit jitters these days and the euro zone just printed a couple of weaker than expected preliminary CPI readings from its top economies recently.
This led traders to worry that the ECB could revert to its dovish stance once more, especially if the upcoming flash CPI readings from the entire region disappoint.
This is why I’m steering clear of putting any orders at market for now and will be sitting on my hands unless the actual figures turn out stronger than expected.
A number of medium-tier reports such as German retail sales, unemployment change, French preliminary CPI and consumer spending are also lined up.
As for the Loonie, I’m still pricing in a continuation of the oil price drop at some point since the downtrend looks strong and fundamentals are still pointing to an oversupply.
Although the API and EIA reports this week showed a smaller than expected buildup in stockpiles, the fact remains that inventories keep rising and rig counts keep increasing while global demand isn’t showing any signs of strengthening.
]Besides, the lack of resolve among OPEC discussions so far could also keep a lid on price levels as member nations have yet to decide whether or not they want to extend the output deal until the end of the year.Some cartel members want to see more commitment from non-OPEC members like Russia so that their joint effort to cut production will be more effective, but it could take a long while before they reach a decision.
I’m eyeing a potential long position around 1.4250-1.4300 if fundamentals continue to support my bias.
I’ll set my stop past the lowest Fib and the 1.4100 mark if I’m able to hop in and I’ll aim for the previous high near 1.4600 as my initial profit target.
As always, don’t risk more than 1% of your account on a single trade and make sure you read our risk disclosure if you’re thinking of taking the same setups.
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